RMI-4347 Lecture Notes - Lecture 2: Expected Loss, Standard Deviation, Data Analysis
14 Mar 2019
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Summary measures of loss distributions: frequency, severity, expected loss, standard deviation or variance, maximum probable loss. Qualitative risk assessment: cannot be measured, asks the question what? , some areas to assess: Innovation, product development and marketing: management"s appetite for risk, contractual analysis, compliance and regulatory analysis, human resource and employee safety, social responsibility and corporate citizenship. Insurance market analysis: concerned with, overview of the market, maximum probable loss vs. probable maximum loss, amount of insurance to purchase. Loss data analysis: completeness there must be enough data to make an analysis meaningful, consistency of data big issue in some companies. The same information is not gathered for each claim. Integrity data should be checked for input accuracy; should be current: relevance should yield information on matters about which the organization is concerned. Standard deviation and variance: measure the likelihood and magnitude that an outcome from the probability distribution will deviate from the expected value.
